The Sole Silver Price Depressant

[webmaster]

Subject:The Sole Silver Price Depressant
By: Theodore Butler

Overview: In a recent article, I likened the silver market to a multi-ringed circus, with various activities occurring on different levels. I’d like to draw on that analogy again, and describe the conflicting forces at work that are both pushing prices higher and pulling them lower.

Link: http://news.silverseek.com/TedButler/1215537964.php

[savvy1]

If the price is being artifically depressed in the futures marekts, why arent physical sellers (producers) fighting back????




Have they all hedged long term to finance to production?


If so, when will these hedges unwind?


Maybe the industrial side of the demand equation is not as robust as bull market enthusiasts claim?

[jadams49@columbus.rr.com]

I can not understand how these shorts depress prices. I am sure that if others like me had the ability to explain this that support for your analysis would accumulate very rapidly.

I am a novice so I try to relate this to things that I know. In real estate if you buy an option to purchase a piece of property, the option could conceivably be sold for a greater amount of money with no effect on the value of the underlying property.

Now I am not clear why the short sellers have the ability to depress prices. I read an article recently about naked shorts and the dilution effect of doing that, but I am not clear on the mechanics of how borrowing non-existant shares affects the price of those shares becuase no money has been used and on face value it appears that the short seller is at the mercy of market forces. I do not see the effect on prices of this practice. Just as in the case of the call options, I do not see there affect on market prices either as I tried to illustrate with a real estate purchase option.

Also the notion that there is a shortage, if this shortage is real, should prevail in the very near future.

Could you lower the sophistication of an answer so that us neophytes can understand it well enough to repeat it and join in your crusade. Please include why the silver stock prices are also depressed as well. Do not be afraid to be basic in your explanation.

I do own silver and silver stocks and hope you are right in your expectations.

Silver Bug

[duneyman]

Is Ted Butler right or wrong - or perhaps just a little early ? To the best of my knowledge, no one has ever successfully challenged him or even bothered to try. He does tend to wear me out with his constant talk of a soon to be explosion and he was always mentioning the huge ( 100 million plus ounce ) annual industrial silver deficits - which have basically disappeared by now. I got into silver seven years ago because of these deficits and not because of the decline of the dollar, the Federal Reserve ,financial crises, etc.



Bill

[boltostein]

I am with the other respondents. Being new at this, and owning SLV and silver coins, I too wonder about this great explosion that is to occur. I am also concerned of the true situation of the supply and demand on silver. Isn't it true that India or a similar geographic area country has quite a bit of silver "in the ground" that would be mined when the price elevated?

Thanks in advance,
Boltostein

[silver wink]

Gee, wouldn't it be terrible if all the bashers who hang out on the Yahoo message boards for mining shares were to start joining here to bash !

[anomaly]

Originally Posted by jadams49@columbus.rr.com

I can not understand how these shorts depress prices. I am sure that if others like me had the ability to explain this that support for your analysis would accumulate very rapidly.

Here is a primer on futures trading. Note that speculators generally take the short side of the transaction, as industrial users are long to hedge against future increases in price. http://tfc-charts.w2d.com/tafm/

Originally Posted by jadams49@columbus.rr.com

I am a novice so I try to relate this to things that I know. In real estate if you buy an option to purchase a piece of property, the option could conceivably be sold for a greater amount of money with no effect on the value of the underlying property.

Futures positions are not options. You can trade options on futures, but options on futures do not affect the value of the underlying assets either. I don't know of any instrument in real estate that is equivalent to a futures contract.

Originally Posted by jadams49@columbus.rr.com

Now I am not clear why the short sellers have the ability to depress prices. I read an article recently about naked shorts and the dilution effect of doing that, but I am not clear on the mechanics of how borrowing non-existant shares affects the price of those shares becuase no money has been used and on face value it appears that the short seller is at the mercy of market forces. I do not see the effect on prices of this practice. Just as in the case of the call options, I do not see there affect on market prices either as I tried to illustrate with a real estate purchase option.

It's probably easiest to answer this question with a question. If you buy 1000 shares of SLV, is there a difference whether you're getting ACTUAL shares issued by Barclay's or IMAGINARY shares?

I hope that is sufficient to clarify. If it is not, I recommend finding a resource online that explains the logistics of price action in financial markets.

Originally Posted by jadams49@columbus.rr.com

Please include why the silver stock prices are also depressed as well.

Other highly related questions would be: why has the Federal Reserve stopped reporting money supply growth (M3)? How is the FOMC utilizing the repurchase agreement pool (repo pool)? What would soaring precious metals prices indicate about our currency, economy, and government?

anoma|y

[JesterJay]

Yes, the bashers ARE proof of the dang near conspiratorial level of bearish hype in the general silver media like on Kitco.com and places that want you to buy PAPER and not real silver.
Looks Like Nadler had a bunch of his friends sign up to post this topic.
The Quickening Approaches!
JesterJay

Originally Posted by silver wink

Gee, wouldn't it be terrible if all the bashers who hang out on the Yahoo message boards for mining shares were to start joining here to bash !

[pkrebaum]

It's my personal belief that the reason more Silver isn't showing up on the SLV inventory is because they're selling people non-existent Silver, not because people aren't buying any.

If you have a fund, (SLV) which is shorting on the buy and is held by one of the suspected shorts (Barclays) which is shorting on the sell..... they're taking your money and buying naked (non-existent) Silver from someone who is selling naked (non-existent) Silver. >>Your money disappears and non-existent Silver takes its place.<<
RESULT: the price of Silver has to go down since there's more Silver chasing fewer dollars. A naked buyer and naked seller working together in cahoots can now "create" Silver out of thin air, depressing the price.

Call me paranoid, but if you believe most of what Ted Butler writes about the Silver Shorts, then my conspiracy theory here is just one rung up the ladder from his....

[joshrain]

so ted says that its due to the comex short that silver prices are depressed.

on the other hand, he also says that for every long there is a short and vice versa. so if there is a huge concentration of short in the comex will there be an equivalent number of longs in the comex. am i missing something?

if there is huge concentration of shorts, what about people who own long silver contracts, if they know its a loose-loose for them, why don't they do something?